FINANCIAL MANAGEMENT ASIGNMENT

EMBA B-40C
UNIVERSITAS GADJAH MADA

Nama : Fitriyanto
Kelas : Eks B 40C
NIM : 20/465247/PEK/26250
No reg : 40P20083
Mata Kuliah : Financial Management
Dosen : Dr. Fernando J. Sitohang, MBA

 Distribution to Shareholders: Dividends and Repurchases And Capital

Structure Decisions (KABEE 14, 15)

Assignment: Problems CH14: 14-4, 14-5, 14-9, CH15: 15-6, 15-8, 15-10

1. CH14: 14-4
One position expressed in the financial literature is that firms set their dividends as a residual
after using income to support new investments. Explain what a residual policy implies (assuming
that all distributions are in the form of dividends), illustrating your answer with a table showing
how different investment opportunities could lead to different dividend payout ratios.

Jawab:
Residual distribution model terdiri dari 3 komponen yakni the firm’s investment opportunities, its
target capital structure, dan the availability and cost of external capital. Konsep residual sendiri
dapat diartikan “leftover” (sisa) sehingga dapat dijelaskan bahwa pembayaran deviden adalah
hasil dari sisa dari pendapatan setelah dikurangi semua kewajiban dan pengembangan
perusahaan dll. Residual Policy menjelaskan bahwa akan dibayarkan dengan sejumlah sisa dari
pendapatan dalam hal ini adalah net income, apabila perusahaan tertarik untuk
menginvestasikan retained earningnya maka jika masih ada sisa akan dibagikan kepada
shareholder.

Investment Oportunity Dividend payout ratios

High Low
Moderate Moderate
Low High

Jika investment opportunity tinggi maka deviden payout rasio akan rendah namun di beberapa
kasus deviden payout ratio akan tinggi, rendahnya deviden payout ratio karena perusahaan akan
berfokus dalam penggunaan retained earningnya untuk membiayai investasi baru sehingga sisa
retain earning akan menjadi sedikit atau bahkan tidak ada. Jika investment opportunity bersifat
moderat maka Deviden payout ratio akan moderat pula. Sementara itu apabila investment
opportunity rendah maka Devident payout ratio akan tinggi hal tersebut biasanya terjadi karen
perusahaan sudah dalam posisi mature dan rasio pertumbuhan perusahaan rendah.
2. CH14: 14-5
Indicate whether the following statements are true or false. If the statement is false, explain why.
a. If a firm repurchases its stock in the open market, the shareholders who tender the stock are
subject to capital gains taxes.
(Benar, ketika investor menjual saham mereka maka akan dikenakan pajak untuk
capital gain)

b. If you own 100 shares in a company’s stock and the company’s stock splits 2- for-1, then you
will own 200 shares in the company following the split.
(Benar, apabila perusahaan melakukan stock splits 2 for 1 dan kita memiliki 100
saham, maka jumlah saham kita akan menjadi 200)

c. Some dividend reinvestment plans increase the amount of equity capital available to the firm.
(Benar, beberapa kebijakan devident reinvestement plan terutama yang berhubungan
dengan penerbitan saham baru akan meningkatkan jumlah modal yang tersedia dalam
perusahaan)

d. The Tax Code encourages companies to pay a large percentage of their net income in the
form of dividends.
(Salah, Tax code akan memungkinkan penghematan pajak bagi perusahaan untuk
lebih banyak dalam menggunakan hutang dan membayar Bunga daripada
membayarkan deviden ke investor)

e. A company that has established a clientele of investors who prefer large dividends is unlikely
to adopt a residual dividend policy.
(benar, jika perusahaan memiliki clientele investor yang menyukai pembagian deviden
tentu mereka tidak adan adopt residual dividend policy, karena investor lebih
menyukai pembabagian deviden dalam jumlah yang besar. Seperti yang kita ketahui
bahwa dalam konsep residual dividend policy pembagian deviden bersumber dari sisa
retained earning setelah dikurangi oleh investasi sehingga dalam hal ini bias saja
perusahaan membagikan deviden dalam jumlah yang kecil atau bahkan tidak
membagikan deviden sama sekali )

f. If a firm follows a residual dividend policy then, holding all else constant, its dividend payout
will tend to rise whenever the firm’s investment opportunities improve.
(Salah, jika perusaan menggunakan konsep residual dividend policy, dan
mempertahankan semua hal dengan konstan maka deviden payout ratio tidak akan
bertambah apabila adanya kenaikan investment opportunities, karena dalam konsep
residual dividend policy selalu berbanding terbalik dengan investment opportunities)

3. CH14: 14-9
The Welch Company is considering three independent projects, each of which requires a $5
million investment. The estimated internal rate of return (IRR) and cost of capital for these
projects are as follows:
Project H (high risk): Cost of capital = 16%; IRR = 20%
Project M (medium risk): Cost of capital = 12%; IRR = 10%
Project L (low risk): Cost of capital = 8%; IRR = 9%
 Note that the projects’ cost of capital varies because the projects have different levels of risk. The
company’s optimal capital structure calls for 50% debt and 50% common equity. Welch expects
to have net income of $7,287,500. If Welch bases its dividends on the residual model (all
distributions are in the form of dividends), what will its payout ratio be?

Jawab:
Cost Of Capital adalah sebesar USD 10 Million, jumlah tersebut diperoleh dari jumlah required
investmen adalah USD 5 Mio dan optimlal capital structurenya adalah 50% hutang dan 50%
common equity.

Deviden = Net Income – Needed Equity

Deviden = USD 7,287,500 – USD 5,000,000
Deviden = USD 2,287,500

Payout Ratio = USD 2,287,500/ USD 7,287,500 = 0.3139 = 31.39%.

4. CH15: 15-6
Dye Trucking raised $150 million in new debt and used this to buy back stock. After the recap,
Dye’s stock price is $7.50. If Dye had 60 million shares of stock before the recap, how many
shares does it have after the recap?

Jawab:
π prior=¿60
D = USD 150 Mio
P = USD 7.5
π post … ?
D new −D old
π post =π prior−number of shares repurchased=π prior −
P prior
D
π post = π prior – = 60 – ($150/$7.5) = 60 – 20 = 40 million
P

5. CH15: 15-8
The Rivoli Company has no debt outstanding, and its financial position is given by the following
data:
Assets (book = market) $3,000,000
EBIT $500,000
Cost of equity, rs 10%
Stock price, P0 $15
Shares outstanding, n0 200,000
Tax rate, T (federal-plus-state) 40%

The firm is considering selling bonds and simultaneously repurchasing some of its stock. If it
moves to a capital structure with 30% debt based on market values, its cost of equity, rs, will
increase to 11% to reflect the increased risk. Bonds can be sold at a cost, rd, of 7%. Rivoli is a
no-growth firm. Hence, all its earnings are paid out as dividends. Earnings are expected to be
constant over time.
a. What effect would this use of leverage have on the value of the firm?
b. What would be the price of Rivoli’s stock?
c. What happens to the firm’s earnings per share after the recapitalization?
d. The $500,000 EBIT given previously is actually the expected value from the
following probability distribution:
Probability EBIT
0.10 ($ 100,000)
0.20 200,000
0.40 500,000
0.20 800,000
0.10 1,100,000
Determine the times-interest-earned ratio for each probability. What is the probability of not
covering the interest payment at the 30% debt level?

Jawab:
a. What effect would this use of leverage have on the value of the firm?
Dijelaskan bahwa nilai buku asset sama dengan nilai pasar asset yakni $3,000,000. Dalam
hal ini nilai hutang adalah nol dan nilai shares adalah $15 dengan jumlah 200.000. sehingga
dapat dihitung sebagai berikut:
V = D + S = 0 + ($15)(200,000) = $3,000,000.

Cost Of Capital (original)

WACC=wd ( 1−T ) r d + w s r s
WACC=0+1.0∗10 %
WACC=10 %

Cost Of Capital With financial leverage (wd=30%):

WACC=0,7 ( 1−T ) r d +w s r s
WACC=wd ( 1−0.4 ) 7 % +0,7∗11 %
WACC=8,96

∞
FCF t
V ops =∑
t =1 (1+WACC )t

Karena nilai growth adalah nol, maka Free Cash Flow (FCF) sama dengan EBIT (1-T).
Sehingga value of operation adalah sebesar
FCF
V ops =
WACC
( EBIT )(1−T )
V ops =
WACC

(500.000)(1−40)
V ops =
0.0896
 V ops =USD 3.348.214.286
Dengan menambah financial laverage sebanyak 30% atau sebesar USD 900.000 dengan
penambahan hutang maka akan menaikkan nilai perusahaan dari USD 3.000.000 menjadi
USD 3.348.214.286

b. What would be the price of Rivoli’s stock?

 Menggunakan target 30% hutang pada struktur modal maka nilai dari hutang adalah
sebesar
D = Wd x V = 0,30 x (3.348.214.286) = USD 1,004,464.286

 Sedangkan nilai dari modal adalah:

S= V-D = 3.348.214.286 - 1,004,464.286 = $2,343,750

 Sehingga harga per lembar saham adalah :

P = (S + (D-D0))/n0
= ($2,343,750 +($1,004,464.286-0))/200.000
= $16.741

c. What happens to the firm’s earnings per share after the recapitalization?
X = (D – D0)/P = ($1,004,464.286-0)/ $16.741= 60.000.256 dibulatkan menjadi $60.000
Jumlah saham yang tersisa adalah:
n = 200.000 – 60.000 = 140.000

Pada posisi awal

EPS = NI/n0
= [(EBIT-Int.)(1-T)]/n0
= [ ($500,000 -0) (1-0,4)]/200.000
= $1.5
Dengan Laverage
EPS = NI/n0
= [(EBIT-Int.)(1-T)]/n0
= [($500,000 -0.07 (1,004,464.286)) (1-0,4)]/140.000
= [($500,000 -$70.312,5)) (1-0,4)]/140.000
= $257.812,5 / 140.000 = 1.842

Selisih EPS pada posisi awal atau initial position dan saat penambahan laverage adalah:
1.842 – 1.50 = $ 0.342, maka dapat disimpulkan bahwa dengan penambahan hutang akan
meningkatkan EPS $ 0.342
d. The $500,000 EBIT given previously is actually the expected value from the following
probability Distribution, Determine the times-interest-earned ratio for each probability. What
is the probability of not covering the interest payment at the 30% debt level?
Presentase Hutang 30%, times-interest-earned (TIE) = EBIT/I = EBIT/70.312,5

I (interest) sudah dikalkulasi sebelumnya 7% x D = 7% x 1,004,464.286 = 70.312,5

Probability EBIT TIE

0.10 ($ 100,000) (1.42)
 0.20 200,000 2,84
0.40 500,000 7,11
0.20 800,000 11,38
0.10 1,100,000 15,64

Pembayaran Bunga tidak ada tercover ketika nilai TIE adalah <1,0. Dan hal ini terjadi pada
probabilitas 0,1 atau 10%, untuk probabilitas diatas 10% semua nilai TIEnya >1,0 sehingga
pembayaran atas bunganya dapat dicover

6. CH15: 15-10
Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA
currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2
million shares outstanding. BEA is a zero-growth firm and pays out all of its earnings as
dividends. The firm’s EBIT is $14.933 million, and it faces a 40% federal-plus-state tax rate. The
market risk premium is 4%, and the risk-free rate is 6%. BEA is considering increasing its debt
level to a capital structure with 40% debt, based on market values, and repurchasing shares with
the extra money that it borrows. BEA will have to retire the old debt in order to issue new debt,
and the rate on the new debt will be 9%. BEA has a beta of 1.0.
a. What is BEA’s unlevered beta? Use market value D/S when unlevering.
b. What are BEA’s new beta and cost of equity if it has 40% debt?
c. What are BEA’s WACC and total value of the firm with 40% debt?

Jawab :
a. What is BEA’s unlevered beta? Use market value D/S when unlevering.
D
β L =β U [1+ ( 1−T ) ]
S
D
β u=β l /[1+ ( 1−T ) ]
S
0,4
β u=1/[1+ ( 1−0,4 ) ]
0.6
β u=0,870

b. What are BEA’s new beta and cost of equity if it has 40% debt?
D
β L =β U [1+ ( 1−T ) ]
S
0,4
β L =0.87 [1+ ( 1−0,4 ) ]
0.6
0,4
β L =0.87 [1,6 x ]
0.6

β L =1.128

c. What are BEA’s WACC and total value of the firm with 40% debt?
rs = 6 + 1.128 (4) = 10.827
 WACC=wd ( 1−T ) r d + w s r s
WACC=0.4 ( 1−0,4 ) 0,09+ 0,6 x 10.827
WACC=0. 4 x 0,4 x 0 , 09+0,6 x 10.827
WACC=8.683 %

V = FCF/WACC = [EBIT x(1-T)]/WACC = (14.933)(1-0,4)/8.683 % = $103.188 million

 Working Capital Management And Multinational Financial Management

(KABEE 16, 17)

Problems CH16: 16-12, 16-13, 16-14; CH17: 17-9, 17-11, 17-13;

1. CH16: 16-12
The Christie Corporation is trying to determine the effect of its inventory turnover ratio and days
sales outstanding (DSO) on its cash flow cycle. Christie’s sales last year (all on credit) were
$150,000, and it earned a net profit of 6%, or $9,000. It turned over its inventory 7.5 times during
the year, and its DSO was 36.5 days. Its annual cost of goods sold was $121,667. The firm had
fixed assets totaling $35,000. Christie’s payables deferral period is 40 days.
a. Calculate Christie’s cash conversion cycle.
b. Assuming Christie holds negligible amounts of cash and marketable securities, calculate its
total assets turnover and ROA.
c. Suppose Christie’s managers believe the annual inventory turnover can be raised to 9 times
without affecting sales. What would Christie’s cash conversion cycle, total assets turnover,
and ROA have been if the inventory turnover had been 9 for the year?

Jawab:
a) Calculate Christie’s cash conversion cycle.
Inventory turn over = sales/inventory
7.5 = 150.000/ inventory
Inventory = 150.000/7.5 = $20.000

Inventory
Inventory conversion period= ∗365 days
Cost of goods sold
20,000
Inventory conversion period= ∗365 days = 59,99
$ 121,667
Pembulatan menjadi 60
Cash ConversionCycle=Inventory conversion period+ Average collection period−Payables deferr
Cash ConversionCycle=60+36.5−40
Cash ConversionCycle=56.5 days

b) Assuming Christie holds negligible amounts of cash and marketable securities, calculate
its total assets turnover and ROA.
ROA = Profit Margin x Total Assets turn over
Total Assets = Inventory + Receivebles + Fix Assets
Total Assets = $20.000 + ($150.000/365) + $35.000
 Total Assets = $20.000 + $15.000+ 35.000 = $70.000
Total Assets Turn Over = Sales/Total Assets
Total Assets Turn Over = 150.000/70.000
Total Assets Turn Over = 2.1429 x

ROA = Profit Margin x Total Assets turn over

ROA = 0.06 x 2.1429
ROA = 0.1286
ROA = 12.86%

c) Suppose Christie’s managers believe the annual inventory turnover can be raised to 9
times without affecting sales. What would Christie’s cash conversion cycle, total assets
turnover, and ROA have been if the inventory turnover had been 9 for the year?

Inventory turn over = sales/inventory

9 = 150.000/inventory
Inventory = 150.000/9 = $16.667

Inventory
In ventory conversion period= ∗365 days
Cost of goods sold
=$16.667x 365/$121,667 = 50 days (pembulatan)

Cash Convertion Cycle = 50 + 36.5 – 40 = 46.5 days

Total Assets = Inventory + Receivebles + Fix Assets

Total Assets = $16.667 + $15.000 + $35.000
Total Assets = 66.667

Angka inventory bersala dari perhitungan inventory turnover ratio

Total Assets Turnover = $150.000/$66,67 = 2.25x

ROA = $9000/666.667 = 13.5%

2. CH16: 16-13
The Rentz Corporation is attempting to determine the optimal level of current assets for the
coming year. Management expects sales to increase to approximately $2 million as a result of an
asset expansion presently being undertaken. Fixed assets total $1 million, and the firm wishes to
maintain a 60% debt ratio. Rentz’s interest cost is currently 8% on both short-term and longer-
term debt (both of which the firm uses in its permanent capital structure). Three alternatives
regarding the projected current asset level are available to the firm: (1) a tight policy requiring
current assets of only 45% of projected sales, (2) a moderate policy of 50% of sales in current
assets, and (3) a relaxed policy requiring current assets of 60% of sales. The firm expects to
generate earnings before interest and taxes at a rate of 12% on total sales.
Jawab:
a. What is the expected return on equity under each current asset level? (Assume a 40%
effective federal-plus-state tax rate.)

Tight Moderate Relaxed

Current assets

(% of sales  Sales) $ 900,000 $1,000,000 $1,200,000

Fixed assets 1,000,000 1,000,000 1,000,000

Total assets (FA +CA) $1,900,000 $2,000,000 $2,200,000

Debt (60% of assets) $1,140,000 $1,200,000 $1,320,000

Equity (40% x Total Asset) 760,000 800,000 880,000

Total liability and equity $1,900,000 $2,000,000 $2,200,000

EBIT (12%  $2 million) $ 240,000 $ 240,000 $ 240,000

Interest (8%) (8% x Debt) 91,200 96,000 105,600

Earnings before taxes (EBIT-I) $ 148,800 $ 144,000 $ 134,400

Taxes (40%) (40% x EBT) 59,520 57,600 53,760

Net income $ 89,280 $ 86,400 $ 80,640

Return on equity 11.75% 10.80% 9.16%

b. In this problem, we have assumed that the level of expected sales is independent of current
asset policy. Is this a valid assumption?
Tidak, asumsi tersebut mungkin tidak akan valid pada kehidupan sehari-hari, kebijakan asset
lancer perusahaan terutama yang berkaitan dengan piutang, seperti diskon, periode
 penagihan dan kebijakan penagihan munkin memiliki pengaruh signifikan terhadap penjulan
namun sifat sebenarnya dari fungsi ini mungkin sulit diukur dan menentukan asset lancar
yang mungkin optimal mungkin tidak dapat dilakukan dalam kenyataanya

c. How would the overall riskiness of the firm vary under each policy?
Seperti yang ditunjukkan pada jawaban huruf a. dapat dijelaskan bahwa kebijakan yang
lebih ketat (tight) akan mengarah pada hasil yang lebih tinggi (Higher expected return),
namun seiring dengan penurunan tingkat asset saat ini kemungkinan sebagian penurunan ini
berasal piutang. Hal ini dapat dicapai dengan menerapkan diskon yang lebih tinggi, periode
pengumpulan yang lebih singkat dan atau kebijakan penagihan yang lebih ketat. Seperti
yang diuraikan di atas hal ini akan berdampak pada penjualan dan kemungkinan
menurunkan laba. Kebijakan penagihan yang lebih ketat akan menambah beberapa biaya
tambahan dan tentunya akan mengurangi biaya utang yang tak tertagih. Aset lancar yang
lebih rendah dapat berarti asset likud yang lebih rendah dengan demikian kemampuan
perusahaan dalam menanganin kontijensi akan terganggu. Risiko tinggi dari liquiditas yang
tidak memadai akan meningkatkan risiko kebangkrutan perusahaan dan dengan demikian
meningkatkan kemungkinan gagal memenuhi biaya tetap (FC) perusahaan. Selain itu
persediaan yang lebih rendah dapat diartikan bahwa perusahaan mungkin saja dapat
kehilangan penjualan dan atau penghentian produksi yang mahal. Dilihat lebih lanjut analisis
mengenai hasil perhitungan di atas dengan potential losses dan probability akan sangat sulit
untuk dilakukan.

3. CH16: 16-14
Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl’s
Doll Shop. Business has been good, but Koehl has frequently run out of cash. This has
necessitated late payment on certain orders, which is beginning to cause a problem with
suppliers. Koehl plans to borrow from the bank to have cash ready as needed, but first she needs
a forecast of just how much she should borrow. Accordingly, she has asked you to prepare a
cash budget for the critical period around Christmas, when needs will be especially high. Sales
are made on a cash basis only. Koehl’s purchases must be paid for during the following month.
Koehl pays herself a salary of $4,800 per month, and the rent is $2,000 per month. In addition,
she must make a tax payment of $12,000 in December. The current cash on hand (on December
1) is $400, but Koehl has agreed to maintain an average bank balance of $6,000—this is her
target cash balance. (Disregard cash in the till, which is insignificant because Koehl keeps only a
small amount on hand in order to lessen the chances of robbery.)
The estimated sales and purchases for December, January, and February are shown below.
Purchases during November amounted to $140,000.
Sales Purchases
December $160,000 $40,000
January 40,000 40,000
February 60,000 40,000
a. Prepare a cash budget for December, January, and February.
b. Now suppose that Koehl starts selling on a credit basis on December 1, giving customers 30
days to pay. All customers accept these terms, and all other facts in the problem are
unchanged. What would the company’s loan requirements be at the end of December in this
case? (Hint: The calculations required to answer this question are minimal.)
Jawab:

a. Prepare a cash budget for December, January, and February.

Collections and Purchases:
December January February

Sales (Collections) $160,000 $40,000 $60,000

Purchases 40,000 40,000 40,000

Payments for purchases 140,000* 40,000 40,000

Salaries 4,800 4,800 4,800

Rent 2,000 2,000 2,000

Taxes 12,000 ---     ---   

Total payments $158,800 $46,800 $46,800

Cash at start of forecast $ 400 ---     ---   

Net cash flow (Coll – Pymts) 1,200 ($ 6,800) $13,200

Cumulative NCF $ 1,600 ($ 5,200) $ 8,000

Target cash balance 6,000 6,000 6,000

Surplus cash or

loans needed ($ 4,400) ($11,200) $ 2,000

*November purchases = $140,000.

b. Now suppose that Koehl starts selling on a credit basis on December 1, giving customers 30
days to pay. All customers accept these terms, and all other facts in the problem are
unchanged. What would the company’s loan requirements be at the end of December in this
case? (Hint: The calculations required to answer this question are minimal.)
 Jika perusahaan menhual secara kredit pada 1 Desember maka penerimaan perusaan
tersebtu akan nol selama bulan desember dan turun dari sebelumnya $160.000. oleh karena
itu perusahaan harus meminjam atau berhutang sebesar $160.000 sehingga pinjaman yang
terhutang per 31 Desember adalah sebesar $164.400. Pesyaratan akan pinjaman akan
meningkat secara bertaham pada bulan tersebut. Dapat dilihat efek dari perubahan kebijakan
kredit hingga januari dan feburari. Dalam hal ini mungkin akan lebih baik jika perusahaan
membuat cash budget baru.

4. CH17: 17-9
You are the vice president of International InfoXchange, headquartered in Chicago. All
shareholders of the firm live in the United States. Earlier this month, you obtained a loan of 5
million Canadian dollars from a bank in Toronto to finance the construction of a new plant in
Montreal. At the time the loan was received, the exchange rate was 75 U.S. cents to the
Canadian dollar. By the end of the month, it has unexpectedly dropped to 70 cents. Has your
company made a gain or loss as a result, and by how much?
Jawab:
Nilai Kurs US dollar jatuh dari 75 cent menjadi 70 Cent sehingga nilai liability perusahan akan
turun dari yang semula $0.75 x 5.000.000 = $3.750.000 menjadi $0.70 x 5.000.000 =
$.3.500.000, sehingga dapat dikatakan perusaan akan mendapat keuntungan atas penurunan
kurs sebesar $250.000. Namun dalam hal ini situasi ekonomi yang mungkin sebenarnya terjadi
akan berbeda. Apabila pinjaman tersebut merupakan pinjaman jangka Panjang dan pada periode
pinjaman tersebut tentunya nilai tukar akan berubah sebelum pinjaman tersebut lunas. Hal yang
lebih penting adalah nilai sekarang dari bunga masa depan dan pembayaran pokok dalam USD.
Kemungkinan untung dan rugi lain adalah pada persediaan dan asset perusahaan lainnya.

5. CH17: 17-11
Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at
today’s spot rate. The firm’s financial manager, James Desreumaux, has noted the following
current spot and forward rates:
U.S. Dollar/Franc Franc/U.S. Dollar
Spot 1.6590 0.6028
30-day forward 1.6540 0.6046
90-day forward 1.6460 0.6075
180-day forward 1.6400 0.6098
On the same day, Desreumaux agrees to purchase 15,000 more watches in 3 months at the
same price of 1 million francs.
a. What is the price of the watches, in U.S. dollars, if purchased at today’s spot rate?
b. What is the cost, in dollars, of the second 15,000 batch if payment is made in 90 days and
the spot rate at that time equals today’s 90-day forward rate?
c. If the exchange rate for the Swiss franc is 0.50 to $1 in 90 days, how much will Desreumaux
have to pay (in dollars) for the watches?

Jawab:
a) What is the price of the watches, in U.S. dollars, if purchased at today’s spot rate?
Watch price in USD = 1.000.000/0.6028 = $1.658.925
 b) What is the cost, in dollars, of the second 15,000 batch if payment is made in 90 days and
the spot rate at that time equals today’s 90-day forward rate?

Watch price in USD (90 days forward rate) = 1.000.000/0.6075 = $1.646.000

c) If the exchange rate for the Swiss franc is 0.50 to $1 in 90 days, how much will Desreumaux
have to pay (in dollars) for the watches?
Jika kurs swiss franc 0.5 ke 1 USD maka :
Watch price in USD = 1.000.000/0.5 = $2.000.000
Nilai tersebut lebih tinggi daripada nilai spot price pada hari ini dan juga lebih besar atau
lebih mahal dari forward contrak selama 90 hari

6. CH17: 17-13
After all foreign and U.S. taxes, a U.S. corporation expects to receive 3 pounds of dividends per
share from a British subsidiary this year. The exchange rate at the end of the year is expected to
be $1.60 per pound, and the pound is expected to depreciate 5% against the dollar each year for
an indefinite period. The dividend (in pounds) is expected to grow at 10% a year indefinitely. The
parent U.S. corporation owns 10 million shares of the subsidiary. What is the present value, in
dollars, of its equity ownership of the subsidiary? Assume a cost of equity capital of 15% for the
subsidiary.

Jawab:
D1 = £ 3
Exchanger rate = $1,6/£
£ depreciates against $1
Deviden Grow = 10%
rs = 15%
Shares = 10 million

gefective∈dollar =¿
gefective ∈dollar =( 1.1 )( 0.95 )−1=4.5 %

D1
P 0=
r s−gefective∈dollar

3 x $ 1.6
P 0=
0.15−0.045

$ 4.8
P 0=
0.105
P0=$ 45.7142857

Total Eguity ¿ $ 45.7142857 x 10.000.000

Total Eguity ¿ $ 457,142,857